The scrap metal market took a serious tumble in the first half of 2015, and is expected to fall even more by the year’s end. While there are many factors to consider when looking at an industrial deal, such as the location and value of the real estate, the amount of equipment, the quality of the inventory, there remains one area that is arguably just as important: scrap metals. The “Three Kings” of commodities -- aluminum, copper, and the heir apparent, stainless steel -- are all important components to understand. As the market for these three metals fluctuate, it is very difficult to predict where the price of certain metal will be in the future. However, it is possible to analyze past and current market trends to judge and evaluate how the market may fare.
With copper currently at $2.31, the market is near an all-time low in looking at the past five years. In June of 2010, the price began to steadily rise from below $3 reaching a record high of $4.50 in February 2011. Around October of that same year, however, the price dove from $4.50 to $3.25 in a single month. Although it made a slight recovery back up to nearly $4 during the first four months of 2012, the price has been steadily dropping at a consistent pace. Having reached $2.31, it's quite possible the metal will continue to decrease in value, barring some unforeseen event.
At $0.70 a pound, aluminum is also at a five year low. At the start of 2010, aluminum was at $1, and during the first half of the year dipped down to $0.90 before shooting up to $1.10. After hitting $1.10, it dove down to below $0.90 by July of 2010, but then steadily rose for the next year, with the stretch from July 2010 to May 2011 being the high of the five year period for aluminum, with the price at $1.25 around April/May of 2011. By the start of 2012, however, the price had dropped back down to $0.90, then towards the end of 2012, reached a new low of $0.82 in August of that same year. By September, however, the price had rebounded to $1, and for the next several years to the present day, the aluminum market has seen a period of spikes and drops between a low of $0.75, which was the price in January 2014, with the high being $0.95 during September of 2014. Now once again, we’ve reached the all-time low price of $0.70.
Analyzing the stainless steel prices and evaluating the market is more complicated than copper and aluminum, as steel isn’t a base metal, but is manufactured by the base metals nickel and iron. Therefore, the prices and price histories of nickel and iron determine the price of stainless steel. Also, the varying degrees of the quality of stainless steel, with 316 SS being the higher quality, affect the value of stainless. However, the cold rolled coils USA steel prices for the past five years are readily available, beginning at $0.40 a pound in late May of 2010, the price first fell to $0.33 before hitting its record high at $0.48 in the summer of 2011. The price fell steadily over the next year, however, dropping below $0.35 by the summer of 2012. The price remained steady, fluctuating between $0.35 and $0.40 until 9 months ago in September 2014, when the sharpest and most significant decline in the five year period began, reaching the current and all-time low of $0.27 as of May 11, 2015.
The Three Kings are at the lowest price in five years- look forward to additional price decreases during the rest of the year and there’s no telling if or when prices will rebound.